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Auto industry: Car sales lose speed as the year nears its close

                                                                 The Express Tribune

Auto industry: Car sales lose speed as the year nears its close

By Farhan Zaheer
Published: November 12, 2013
On month on month (MoM) basis, car sales have dropped by 11% in October 2013 compared to September 2013, mainly due to long Eidul Azha holidays and overall slow economic activities in the country. PHOTO: FILE
KARACHI: 
The sales of local cars in first four months (July to October) of fiscal year 2014 (4MFY14) have jumped up by 7% and touched 42,796 units compared to 39,938 units in the same period last year.
However, on month on month (MoM) basis, car sales have dropped by 11% in October 2013 compared to September 2013, mainly due to long Eidul Azha holidays and overall slow economic activities in the country.
“Apart from slow economic activities, the reason of low sales in October is that people are waiting for next year so that they can buy new car models in January 2014. This is why car sales may further drop in November and December 2013,” Summit Capital analyst Sarfaraz Abbasi said.
Like analysts, industry officials also believe that car sales have dropped because of slow economic activities and the ‘year-end phenomenon’.
“We believe there are two reasons for this drop in sales. One is overall slow economic activities in the country while the second reason is obviously the year-end phenomenon in which car sales are expected to remain low in November-December 2013,” an official of a leading carmaker said on condition anonymity.
However, he stressed that the year-end phenomenon is usually seen in November and December, which means that the main reason behind low car sales in October 2013 is low economic activities in the country.
Among individual companies, Pak Suzuki sales during the period increased by 3.4% to 23,522 units versus 22,753 units sold in the same period last year. In October 2013, the company’s sales stood at 5,556 units, up 9% from 5,094 units in the same month of last year while it has declined by 12% from 6,287 units in the last month, Topline Securities reported on Monday.
Similarly, during the same period, sales of Indus Motors remained stable at 11,014 units, up 0.1% compared with the same period of last year. However, on monthly basis, its sales have shown stability by selling 2,595 units in October 2013, down 0.3% MoM.
Among three major players in the auto industry, Honda Atlas Cars posted a major decline of 22% MoM, selling 1,720 units in the month of October 2013, but was up 8% YoY. In 4MFY14, Honda has shown a growth of 34% to 8,024 compared to 6,009 units in the same period last year.
Change in market share
As far as the market share is concerned, during 4MFY14, Pak Suzuki Motors lost about 2% of its market share bringing its current share to 55% as against the 57% in same period of last year, Summit Capital reported on Monday.
Similarly, Indus Motors has also lost its market share by 2% to 26%, compared with 28% in 4MFY12. The lost share of these companies has mainly been taken by Honda Atlas Cars, which has seen market share increase by 4% to 19%, from 15% in the corresponding period of last year.
Published in The Express Tribune, November 12th, 2013.

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